Correlation Between Great West and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Great West and Absolute Convertible at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Great West and Absolute Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Bond Index and Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Great West and Absolute Convertible and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Great West with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Absolute Convertible.
Diversification Opportunities for Great West and Absolute Convertible
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Great and Absolute is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Great West Bond Index and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible and Great West is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Great West Bond Index are associated (or correlated) with Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Great West i.e., Great West and Absolute Convertible go up and down completely randomly.
Pair Corralation between Great West and Absolute Convertible
Assuming the 90 days horizon Great West is expected to generate 1.81 times less return on investment than Absolute Convertible. In addition to that, Great West is 6.24 times more volatile than Absolute Convertible Arbitrage. It trades about 0.03 of its total potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.37 per unit of volatility. If you would invest 1,021 in Absolute Convertible Arbitrage on September 12, 2024 and sell it today you would earn a total of 130.00 from holding Absolute Convertible Arbitrage or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Great West Bond Index vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Great West Bond |
| Absolute Convertible |
Great West and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Absolute Convertible
The main advantage of trading using opposite Great West and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, Absolute Convertible can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Great West vs. Putnam Convertible Incm Gwth | Great West vs. Absolute Convertible Arbitrage | Great West vs. Calamos Dynamic Convertible | Great West vs. Fidelity Sai Convertible |
| Absolute Convertible vs. Vy Goldman Sachs | Absolute Convertible vs. Invesco Gold Special | Absolute Convertible vs. Short Precious Metals | Absolute Convertible vs. Franklin Gold Precious |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |